Tesla downgraded at Evercore on slowing demand across all models

Evercore downgraded electric car maker Tesla to “underperform” from “in-line” on Monday, citing concerns on the decline in demand across all models.

There are many good reasons to worry about Tesla, including more competition, lower U.S. tax credits and an “aging” product lineup, wrote Evercore analyst Arndt Ellinghorst, who expects these headwinds to weigh on demand and cause a 40% decline in earnings per share by 2020.

Evercore also slashed its 12-month price target for Tesla to $240 from $330, implying 12% downside from Friday’s close. Shares of Tesla are down 1.85% to $268 in premarket trading on Monday.

“The change in recommendation and lower [price target] are driven by a more cautious view on demand across all Models, but in particular the recent severe decline in demand for Model S/X … there is increased uncertainty around near-term demand vs previous bullish forecasts and growth cannot stall for a growth company,” Ellinghorst said in a note to clients Monday.

Demand for Tesla electric vehicles is also challenged by the revised tax incentives. The credit for Tesla buyers was halved to $3,750 beginning Jan. 1. Tesla had slashed prices by $2,000 on all models to offset the tax credit reduction.

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